Bill calls for more scrutiny of Medicaid contracts

FRANKFORT — Kentucky would create a new department to oversee private companies that manage Medicaid services under a bill filed by state Rep. Jimmie Lee, D-Elizabethtown.

The move comes after a stinging audit of the state's Medicaid managed-care program in Louisville and as Gov. Steve Beshear looks to expand such programs in other parts of the state as a way to contain costs in the state and federal health care program that serves the poor and disabled.

House Bill 265 would create an area inside the Cabinet for Health and Family Services' Department for Medicaid Services that would oversee Medicaid contracts. The area or department would include people who have experience with not only Medicaid, but contract oversight, health insurance and managed care, Lee said.

The state's only Medicaid managed-care program, Passport Health Plan, was the subject of a recent state audit that showed questionable spending on travel, food and lobbying. Also, AmeriHealth Mercy, the third-party administrator for Passport Health Plan, agreed last week to pay $2 million to the state and federal governments for submitting false claims to get a bonus payment.

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Lee said that when Passport Health Plan began in 1997, managed care in Medicaid was new. Managed-care models are complex, and the Department for Medicaid Services needs people with a broad array of expertise to write and manage those contracts, he said.

State Auditor Crit Luallen's November audit of Passport found that the cabinet did not have enough detailed financial information from Passport to negotiate the contract. Passport is the state's largest contract — nearly $800 million. It provides health care to approximately 164,000 patients in a 16-county region.

"I think we've learned a lot from that contract, and we don't want the same thing to happen again," Lee said. "This will allow a mechanism to provide more oversight."

Officials with the Cabinet for Health and Family Services said Tuesday the cabinet supports the measure and has worked with Lee to draft the legislation.